Crude oil prices account for about 66 percent of the price of gasoline, according to the U.S. Energy Information Administration.
Granted, other factors play a role in deciding the price we pay at the pump, including taxes and the cost of distribution, but it’s clear that the price of crude directly affects the price of gas. As crude oil increases in price, the price of gasoline tends to increase. Likewise, when markets are calm and the price of crude oil decreases, the price of gasoline decreases.
With that in mind, take a look at the following chart and try to make sense of what’s going on:
See that? Although the price of crude has fallen in recent months, as the above chart clearly indicates, the price of gasoline remains at a record high.
“Anecdotally, it feels like when oil prices rise, gas prices at the pump rise; but when turmoil pauses in global geo-politics – or some entity decides that high oil prices just will not do for the world’s economy – gas prices at the pump seem not to drop so quickly,” writers are Zero Hedge note.
“Yes there are pipeline, inventory (and even tax) issues but the following chart suggests ‘gouging’ on a national level,” they add.
It’s also worth noting that what we’re seeing today with the price of gasoline and crude is eerily similar to what we saw right before the economic collapse of 2008.
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Featured image courtesy Getty Images.